Most insurance policies are sold by agents who are often the primary contact between an insurer and the customer. Typically, an agent provides important services to the customer during the renewal process that include various activities, such as, reminding the customer about renewals, collecting renewal premiums, and ensuring the customer receives receipts on time (e.g., for tax purposes), among others. Often times, however, customers no longer have an active agent servicing their policies.
The reasons for an agent not servicing a policyholder may vary. For example, the agent may no longer be working in the industry, may lack a relationship with the original issuing company (e.g., currently works for a different company), may simply neglect clientele, or have an inability to maintain contact with an expanding clientele. Whatever the reason, the result can negatively affect business as a policyholder may be a potential sales lead. For example, an agent is more likely to have a meeting with a policyholder than with a cold call prospect. However, if a customer bought a policy from an agent and has not heard from him/her again then the customer's next purchase is likely going to be from a different insurance company.
Insurance companies have tried to overcome this problem by implementing, through agents, programs which address the customer service, policy renewal, and additional needs of orphan policyholders. In these programs, orphan policyholders may be contacted one by one to determine their propensity to buy and potential sales value. However, this can be a time consuming process and can increase costs for the customer when agent commissions are taken into consideration. Therefore, the ability to cost-efficiently determine needs of orphan policyholders and match those needs to insurance products may be a requirement for insurance companies looking for a competitive advantage in the insurance industry.